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Is it CMB vs BPOPF or CMB vs Molefe?

Publishing Date : 19 July, 2018

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Being a Principal Officer for a pension fund may sound like a very simple role of just running the day to day activities of a Fund, but the BPOPF/CMB saga has just proven that it takes a whole lot more than meets the eye. And the person to find out the hard way is none other than the Chief Executive and Principal Officer of the Public Fund, Boitumelo Molefe.

The CEO and Principal Officer of BPOPF has in the past months gotten herself into a brawl with CMB partners after she spearheaded the abrupt termination of the contract with the private equity firm without much reasonable cause. This was also against counsel by the CMB Partners that should the Pension Fund terminate contract they risk losing more than half the funds invested as the private equity shares invested in were at their infant stages and most of them had already been converted into liabilities.

Ms Molefe however did not heed the advice and proceeded with her termination process which resulted in the Fund losing about P400 million in the process and only being able to recover P50 million. When reality hit home she cried foul to the Regulator (NBFIRA) whom in turn allowed itself to be drawn into the contractual war between the parties and took CMB to court. The Regulator however, lost big with costs.

On the ruling of the case, the presiding Justice Motumise said NBFIRA failed to back its actions with evidence but rather acted irrationally, and that its moves were drastic with far reaching implications to CMB, its Directors and Shareholders. The Judge proceeded to state that as a responsible Regulator NBFIRA should account for its actions without including the inappropriateness of allowing a regulated entity (BPOPF) to exercise the Regulator’s powers against another regulated entity (CMB). The Judge advised the parties to go for arbitration as the only amicable thing to do. NBFIRA has since appealed this decision.

These events have thus far raised a lot of questions as to why the current Board of Trustees was unable to find solution to the matter and most experts in the field attribute the events to a misplaced sense of duty and interest; but mostly due to the lack of relevant expertise by the Board to deal with dispute matters. This has placed Boitumelo Molefe under scrutiny, with many stating that her actions may have caused the Fund severe losses.

As per the profile displayed on the BPOPF website the Principal Officer is said to have been the Group
Supply Chain Manager for Debswana and briefly acted as the Pension Fund Principal Officer for a period just before 2005. The profile states that she was pivotal in the implementation of a somewhat new investment strategy for the Debswana Pension Fund, she mainly acted as the administration overseer, liaising with Alexander Forbes (the then administrator) on payment of claims and similar actions.

It is expected that her experience from DPF is being utilised currently on the BPOPF. But currently there has also been several reports by Members of the BPOPF that their claims remain unpaid for periods of up to a year without much explanation; something which rarely happened when the Fund was under the administration of Alexander Forbes.

A comparison has also shown that under the administration of the former administrator (Alexander Forbes), the Fund used to pay up to P200 million or more in claims, monthly; a number which has significantly reduced to about P2 million or less since Ms Molefe took over. Close associates state that she seems to be more concerned and preoccupied with the Fund’s investments and neglecting the primary role of her position to ensure an efficient administration of the Fund.

Members Annual Benefit Statements have also been outstanding for almost a year already and there is no reasonable communication to the Members to clarify the delay. Currently not a single Member in the Fund knows how much their savings stand at which is a very bad disappointment. Experts in the field have stated that the Principal Officer should seek assistance from her Actuaries and declare an interest rate without having to wait on her current dispute with CMB as it is not definite when the dispute will be resolved. It is unfair for Members benefits to be held at ransom over the Board’s mistakes. If at all a positive outcome comes out of the dispute she can still augment the new returns into the Member’s benefits and recalculate their account balances.

Ms Molefe was appointed CEO and Principal Officer (PO) of BPOPF in 2015. Her role requires that a PO must never be influenced or encouraged to overstep his/her mandate as caretaker of the Fund. This is a privileged position and Principal Officer decisions can have influence and consequence all the way down the value chain, and over a long period of time. The ultimate objective is to make good returns for Members at a reasonable cost, not advancing personal or political objectives without care of the savers – which are the Members.

Unfortunately it has been evident that due to the disagreements between the Principal Officer and the previous Chairman of the Fund, Carter Morupisi, every action taken by Ms Molefe was intended to frustrate her counterpart resulting in a significant amount of Members’ Funds being lost.

Other Board Members have alluded to the fact that Ms Molefe has been acting as judge jury and executioner as to how and where the Fund assets should be invested despite the fact that she does not possess the expertise of investment management. She seems to have also side-lined her investment management department, claims are that she no longer takes counsel from them and has since hired a Strategy Manager, Mr Thabo Matthews, who seems to be her current right hand man. The ousting of Carter Morupisi as Chairperson has some experts in the field also alluding to the fact that he was probably the only person who could stand against Boitumelo’s vigorous management style hence the relentlessness by the PO to remove him.

We can only hope that the alleged external influence on the PO is non-existent as service providers sometimes unduly influence POs and Chairpersons to make decisions that are not ideal for the Fund as they take advantage of the lack of experience by the Board. On resolving the BPOPF/CMB saga experts in the field state that “Any skilled fund manager would know that among other things, the significance of arbitration is that a dispute between parties normally gets resolved much sooner, with possibly a lot better results than through the courts, especially a sensitive issue that involves public funds.

Arbitration also gets a lot less expensive for both parties involved. There is absolutely no reason why the BPOPF should not humble themselves for the sake of its Members and seek better returns from CMB”. Unfortunately, ties may have been severed irrevocably between the parties to allow for peaceful arbitration and result.

In the 13 years before 2014, the BPOPF was one the most stable, well run institutions which saw stellar growth of its fund assets from a mere P1 billion to over P40 billion in that period. During this period pensioners saw on average, annual returns of about 15% or more and everyone was happy and had confidence in the management of the pension fund.

For the better part of those 13 years, the Public Fund was under the management of Mr Ephraim Letebele who served as the Chief Executive Officer and Chairman of the Board of Trustees. In 2012 Mr Letebele as CEO and Chairperson of the Fund was invited to present at The Africa investor (Ai) CEO Investment Summit, where the BPOPF was recognised as one of the pioneers promoting responsible pension fund investment across Africa.

The Ai CEO Institutional Investment Summit is a unique CEO investor-issuer, invitation-only capital market leaders’ platform, for global institutional investors and sovereign wealth and pension fund investors; to originate and intermediate capital market transactions in Africa. The former CEO was shortly afterwards unceremoniously dismissed from the position and later sued and won against his former employer. The Fund however has since been struggling to find a well-rounded and capable CEO to manage it and the people to suffer the most as a result are its Members.

There has also been allegations of political interference at the centre of the appointment of CEOs of the Fund which has greatly compromised integrity of the institution. The position of Principal Officer for an enormous Fund like the BPOPF can be skilfully demanding and requires a well-rounded individual with ample knowledge and hands-on experience on pension fund administration, legislation, investment management and most importantly financial risk management and decision making; attributes that seems to be lacking on the analysis of the current status of the Fund including the disputes therein. Ms Molefe may have been handed a hard bone to chew on and things are not looking good for the Principal Officer.



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